According to Deputy Finance Minister Datuk Ahmad Maslan, the implementation of the goods and service tax (GST) is not an excuse for automotive players to not lower car prices, he told Bernama. He was adamant that prices of cars should drop, as the current 10% sales tax will be replaced by the 6% GST rate.

“It’s a simple calculation to understand, and automotive industry players should not find an excuse not to lower car prices by blaming it on the GST,” he said. The argument made by some that prices will not necessarily come down – as a result of the GST being imposed at every level of the production and distribution chain – were countered by Maslan, who commented that unlike the sales and service tax, this one is eligible for claims.

“Indeed, we expect car prices to fall, but we are not certain of the rate,” Maslan said. According to him, the government has come up with plans to lower the prices of certain goods, so naturally, the prices of cars should take a dive. MAI CEO Madani Sahari had earlier said that simulations made by MAI showed there should be a slight price reduction of between 1% to 3% for most models, including imported cars.

The 6% GST is set to replace the 10% sales tax and 6% service tax (SST) when it comes into implementation from April 1, 2015.

An “actor” by training, Gregory Sze realised that he has had enough of drama in his life. Following his number one passion (acting was actually number two), he decided to make the jump into the realm of automotive journalism. He appreciates the simple things in life – a simple car with nothing but back-to-basics mechanical engineering and minimal electronics on board.

From my point of view, Datuk Maslan is trying to pin the blame on the automakers distributors while avoiding the main reason Malaysia has such record high car prices is due to excise duty, and for import cars, import tax, which originating from the government.

Anyhow, until April 2015, claims of prices dropping will be taken with a pinch of salt.

By right the prices should come down. The GST imposed by their suppliers to the car manufacturers can be claimed back. Even if their employees eat at restaurant or stay at hotel and claim to the company as business expenses, they can claim back the GST (unlike the current service tax which is not claimable). The net impact to their costs should be zero.

Example, if a car price is now 110k (net after sales tax) it means the price before 10% sales tax is RM100k. With GST, the final price to the customer is RM106k, a reduction of 4k or 3.6%. However, the problem is car companies never reveal their prices before sales tax. They will take advantage by adding the 6% GST to their current price of RM110k making the new final price RM116k to the customer.

Operation Manager. All GST paid for raw material will be claimed back. Even the GST on the Maggie Mee you gave to your worker to eat in the factory can be claimed back. Yap, even the GST on the toilet paper can be claimed back.

Very simple. You need to tune your understanding of GST, which is a value added tax.

Under Sales Tax, a 100k car will be subject to 10k of taxes. The seller collects 10k from the customer, and pays the gov 10k in revenue.

Under GST, a 100k car will be subject to 6k of taxes. The seller, and everybody else on the supply / service train pays 6%, but thanks to deductions the total tax paid to the gov only receives 6k in total.

Hence, from the government’s perspective, since under Sales tax it receives 10k total, and under GST it receives 6k total, the 4k in savings that the gov no longer receives must go somewhere, either to the customer or to the seller.

Anon. If the car is a lorry for transporting food like chicken, the company can even claim back the RM6000 GST paid. Therefore with GST, food producer will find their cost of production coming down because the same lorry will only cost RM100K under GST whereas before GST, it cost RM100+10K. Only stupid people like some Pakatan politician saying cost of production of everything will go up with GST. Many things will likely go up in price with GST but not everything.

Here is someone who know what he is talking about unlike many who simply shouted “Government telling lies” about car price coming down. Of course politicians tell lies and but they sometimes tell truth also. But many don’t have the brain to work out which is which.

In this particular case, assuming other factors like currency exchange remaining the same and car seller not telling lies, car price should come down. You don’t need a 3 years old telling you 6% is less than 10%.

we all know that the manufacturers will have their exemption in the end of production. yet, how will consumer redeem their exemption from there on?

e.g.: in every line of production until end product is formed, there’s a 6% increment of pricing. then, every production process will be sure having a price increase. so the end product will have a price increase instead of price drop, as previously not every production in the line have tax. correct me if i’m wrong.

and we are talking about end products and consumers.
the impact on consumer will be very heavy.

I want to say that having a kosong variant doesn’t mean the prices have dropped. They’re merely letting people have another variant which is more affordable at the expense of many features. Real price drop means ALL of the cars (variants and models) have price reductions.

Obviously the government its promise and shows that they are indeed ketuanan rakyat.

Why?

They have reduce the car price, regardless of the variant. Thats their promise “turunkan harga kereta”. What else you need?

A car brings u to point 1 to point 2, thats all that matters. They have reduce it and yet you people are still complaining, langsung tak bersyukur. You want extra comfort, gadgets then expect to pay more, what is so difficult about that?

why the one-sided bias? the current government is hopeless, true, but how can one ignore the derogatory state of malaysian business ethos? for sure the government is not sincere in their efforts to reduce car prices, at the same time the car manufacturer’s will squeeze as much profit as they can…(refer carmaker and crap UMW comments above) putting the blame solely on the government is naive, just like expecting everything to be all rosy when you do change government is pure wishful thinking. a lot of fundamental flaws in the way we malaysians do things. go figure.

hello, its been done in phases.. you can see the prices have been dropped, and it will continue be reduce over time

you want to reduce 30% instantaneously? the second hard car market will suffer, grey import market will suffer, and do you know how many entrepreneurs will suffer if the government does that? how many livelihood is at stake if they were to reduce 30% immediately.

theres a reason why u r sitting behind ur computer spouting unreasonable demands while the government is governing clean and transparently for a sustainable economy for malaysia

This minister Ahmad Maslan never made it beyond Standard One mathematics. How can by adding tax you reduce the price? He simply mixed up the math operative symbols. No wonder our country economy is in jitters due to calibre people like him in the higher pedestal.

When there were demand to reduce excise tax to reduce car prices, the government told the public that tax is not the only element to determine car price. Now, when the GS-Tax seems to be lesser than S-Tax though having different base for calculation; all of the sudden .. the mood swing now that TAX is the element to determine car price. Talk about consistency …

Eh Datuk Maslan.. Finally U speaking some sense. I have seen and read in FB about comment u usually made in parliament.. Really bangang. wanted to slap the Maslan out of u. But today. its ok, U hav my like for the first time.

Moron get hurt, complaining 47% Idiot and 53% genius.
Better welfare, justice, incentive wont drop from sky.
It’s similar to your job, business. Strive it and get it. PKR might not the best choice.
But obviously, its better than Ayam and Hippo team.

Excise Duty, Import tax, AP, all replaced by GST!
Malaysia tax for excise duty, import tax so many years.
How many trillion gained? Where G use those money?
Last time said, car duty and tax for petrol/diesel subsidy.
Now, almost no subsidy at all on petrol.
and All sales are required to add GST.

After overseeing overall cost structure to make a car after GST impementation, i can assure you guys car price will increase. For new develop car even worse, GST already implement starting from R&D level. Unless you dont want ABS,EBD,ESC,airbag,radio, sport rim, aircond, then you can have a much cheaper car. I’m in OEM car industry, i make car. my info is legit.

Don’t talk nonsense. Every GST paid during R&D and manufacturing can be claimed back. Yes, even the GST on the toilet paper you use in the factory can be claimed back. Only the GST paid by consumer can’t be claimed back.

Why so many people here back-up the manufacturer? Too many car seller inside paultan, ka? By right as consumer we should happy to hear this news. I don’t care how they do it. As far as i’m concerned the car price must go down.

Because Maslan doesn’t talk sense.
The G wants to collect more taxes but expect prices to go down at the expenses of Manufacturer’s profit? CAN! I CUT YOUR SPECS LO. LIKE TOYOTA UMW.

For a start why not the G collects less excise duties/import duties?

And he’s definitely changing topic and pushing the blame to auto makers. Rafizi was talking about car prices should go down because crude oil price has gone down and we are subsidizing the G now essentially.

Remember, every CBU car (example at rm110K pricing) purchased by a Malaysian, the car owner must paid at least min. RM45,000 as an AP taxes. The Manufacturer only get RM65,000 for each unit sold to the Malaysian. So, Do you think they want to drop this easy money after so many years? NO WAY, MAN! NO WAY…

I’m in the OEM part making industry for cars. Do you all know that Parts manufactured to OEM are Sales Tax exempted ? So the GST basically adds 6% to the cost, while even some Raw materials are Sales Tax exempted. R&D was tax-free, now need GST.

You can either post as a guest or have an option to register. Among the advantages of registering is once a name has been registered, a guest cannot post using that name. If you have an account, please login before commenting. If you wish to have a profile photo next to your name, register at Gravatar using the same e-mail address you use to comment.